Which variance is based on actual units sold and standard price per unit?

• A. Sales price variance
• B. Sales volume variance
• C. Material variance
• D. Usage variance

Answer: (A)

In standard costing, the variance that captures the effect of selling at a price per unit different from the standard price, for the actual number of units sold, is the sales price variance. It is calculated using actual units sold and the difference between the actual selling price and the standard price per unit. If the actual price is higher than the standard, the variance is favorable; if it’s lower, it’s unfavorable.

This differs from the sales volume variance, which looks at how many units were sold compared with what was budgeted and uses the standard contribution per unit, not the price per unit. Material variances pertain to the costs of inputs into production, with usage variance focusing on how much material was actually used versus the standard quantity.